BSE Sensex falls 3.1 pct as downturn fears weigh

NEW DELHI (Reuters) – The BSE Sensex fell 3.08 percent on Wednesday, taking its losses over two days to 9.5 percent as investor fears of a global recession and a local downturn remained dominant, despite some data meeting expectations.

Tata Teleservices (Maharashtra) rose 7.6 percent ahead of confirmation that Japan's NTT DoCoMo would buy 26 percent of its parent, Tata Teleservices, for $2.7 billion, but sector leaders Bharti Airtel and Reliance Communication fell 4.1 percent and 2.1 percent respectively.

Reliance Industries dropped 3.7 percent to 1,162.15 rupees, its weakest close since Oct. 28, and ICICI Bank slipped 8.4 percent to a two-week closing low of 397.90 rupees. The two stocks account for more than 20 percent of the main index.

The market got a boost from data showing industrial production rose an annual 4.8 percent in September, above the previous month's 1.4 percent, but, with economists saying a global recession and credit crunch would weigh on the local economy, the gains could not be sustained.

"Industrial production data was not bad in the current context. Macro pictures also look better to me given commodity prices are falling," said Gajendra Nagpal, CEO at Unicon Financial.

"But this selling pressure, gives me the impression that people are not convinced and they want to get out after every rise. And this supply overhang will continue."

The main 30-share BSE index fell 303.36 points to 9,536.33, its lowest close since Oct. 29, with 28 components falling. It hit a three-year low of 7,697.39 on Oct. 27.

In the broader market, 1,703 losers were ahead of 827 gainers on volume of 283 million shares.

The 50-share NSE index fell 3.07 percent to 2,848.45, its lowest close since Oct. 29.

"There are still so many negatives in the environment that any bounce back will be difficult to sustain," said Neeraj Dewan, director at Quantum Securities.

The market is shut on Thursday for a local holiday.

Economists have cut forecasts for Asia's third-largest economy, with many expecting growth to slow to 7 percent or lower in the year to March 2009, sharply down from rates of 9 percent or higher clocked in the past three fiscal years.

Traders said a sustainable recovery in the market was unlikely in the absence of massive investments by foreign funds, which have sold a net $12.7 billion of Indian stocks so far in 2008 after investing a record $17.4 billion last year.


STOCKS THAT MOVED

* Tata Group firms Tata Steel and Tata Motors fell 3 percent and 3.6 percent respectively, after news the conglomerate had put acquisitions on hold.

* Software exporters Tata Consultancy Services and Infosys Technologies rose after the rupee fell 2.4 percent against the dollar, its biggest single-day percentage fall since February 1996.

* Oil & Natural Gas Corp fell 3.2 percent to 711.55 rupees after its chairman said it would lose 3-4 billion rupees ($60-$80 million) a year if it followed a finance ministry directive to keep 60 percent of its surplus cash with state-run banks.